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Is VIPSX a Strong Bond Fund Right Now?

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If you have been looking for Government - Bonds: Misc fund category, a potential starting could be Vanguard Inflation Pro Security Fund (VIPSX - Free Report) . VIPSX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VIPSX is one of many Government - Bonds: Misc funds to choose from. In their portfolios, Government - Bonds: Misc funds hold securities issued by the United States' federal government, which are often seen as risk-free assets and described as extremely low-risk from a default perspective. While a mixed approach usually results in a medium yield and risk profile, this fund category focuses across the curve, meaning the yields and interest rate sensitivity will vary.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VIPSX. Vanguard Inflation Pro Security Fund made its debut in June of 2000, and since then, VIPSX has accumulated about $3.52 billion in assets, per the most up-to-date date available. The fund is currently managed by Gemma Wright Casparius who has been in charge of the fund since August of 2011.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 4.41%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 5.59%, which places it in the top third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of VIPSX over the past three years is 3.69% compared to the category average of 10.85%. The fund's standard deviation over the past 5 years is 3.56% compared to the category average of 9.39%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.9, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VIPSX has a positive alpha of 0.19, which measures performance on a risk-adjusted basis.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, VIPSX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.88%. From a cost perspective, VIPSX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.

Bottom Line

Overall, Vanguard Inflation Pro Security Fund ( VIPSX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

Want even more information about VIPSX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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